Privately I have been talking about the collapse of the dollar since at least 2008. So much so that people sort of roll their eyes when I mention it these days. They don’t use these exact words, but it amounts to, “You have been saying this sort of thing for 15 or 20 years now and nothing has really changed. Why should anyone worry now?”
I have asked financial advisers if I am crazy thinking this is something to be concerned about. They don’t seem to think I’m crazy, but they never give me advice which would appear to take these concerns into account.
These concerns are why I watch the price of gold so closely. My hypothesis is that a rapid increase in gold price will be an indicator that “the end is near”. And my model is that once nearly “everyone” realizes the end is near the collapse will be scary fast, perhaps in weeks or days.
This may be another indicator:
BRICS: China Dumps The Largest US Treasuries in History
BRICS member China dumped a record number of US treasuries and agency debt bonds worth a staggering $53.3 billion. Historically, this is the largest sell-off initiated by China ever recorded and occurred during the first quarter of 2024.
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China and other BRICS countries have been offloading US treasuries worth billions since 2022. The Communist country has a record of dumping the highest in the last two years. The development indicates that BRICS and other developing countries want to move away from owning US assets in their reserves.
The uncontrolled debt of $34.4 trillion is worrisome making BRICS rely on local currencies and not the dollar. In addition, even a close ally of the US, Belgium dumped $22 billion worth of treasuries during the same period. This shows that even European nations are beginning to distance themselves from the US economy, including selling off bonds and treasuries.
Prepare appropriately.
So given that the current national debt is about 34 T$, China dumping $55 G$ is a bit over 0.1% of the total. It’s hard to see why “staggering” is a good adjective to apply. “Modest” is more accurate though less flashy. 🙂
I suspect one reason you don’t get sensible answers from financial advisors about a dollar collapse is that this sort of scenario is way outside what they are capable of dealing with, or even thinking about So they might recognize it as possible but they aren’t equipped to say what to do about it, any more than a computer technologist would be able to tell you what to do about a scenario where electricity isn’t available.
As of about a year ago, about 22% is owned by another arm of the Federal Government. The Federal Reserve holds about another 20%.
They probably shouldn’t be included when calculating the percentage held by China and others who may decide to dump US Treasuries.
No, it won’t be gradual. https://dailyhodl.com/2024/06/02/517000000000-in-unrealized-losses-hit-us-banking-system-as-fdic-warns-63-lenders-on-brink-of-insolvency/
What’s the line from “To Have and Have Not”? The novel, not the movie.
“How did you go Bankrupt?”
“First Slowly, then quickly.”
“Doxit/ Dexit/ $exit (If I might coin a word), where the dollar will no longer be the world’s Reserve Currency (or even the currency to buy oil with), will happen more suddenly than the Wall street wizards will be able to recognize it.
That $53+B was “redeemed” is not of itself all that noteworthy because as pkonig points out it’s .01% of $34T and as a single data point is just random noise in the system.
I’d like to know where that $53B went – what did they invest in with it? If it’s all gold that would be significant, and if that redemption becomes a trend rather than a single data point, especially if it becomes a more widespread multi-country trend, it would indicate a significant change coming.
And, as Rolf points out, there are quite a few banks standing at the precipice. I’m wondering how much legerdemain is occurring behind the D.C. curtain; it would not surprise me to learn that substantial manipulation is afoot, intended to arrive just in time to cripple a freshly elected president. Things like that, though, often develop their own twists and turns and become not just unpredictable but uncontrollable.
Being a super-manufacturer inside a collective system? Any importable raw material/machine one might use in the future is probably a net gain over dollar backed securities that are losing purchasing power daily.
Or you could use them to buy oil from the strategic oil reserve, sale it back to us through Venezuela for a net gain. At which point your actually making a profit off inflation.
One things for sure. Unlike us. Whatever they do with our securities. They won’t be losing on the deal.
Or they could be just investing them in our government. That seems to pay a 100 to 1.
The reason they and others are disinvesting is to create a firewall against the seizure of assets that is currently being done to Russia and private citizens thereof. The reason they are doing it gradually is to not crash the value of their remaining assets. Sort of a half measure but that is typical of all governments.
A timely post from Vox:
https://voxday.net/2024/06/05/the-end-of-the-petrodollar/
Prepare accordingly.
Either a good time to be up to your eyeballs in debt (it may vanish in hyper-inflation) or totally out of debt (you will be unable to service it, or they’ll unilaterally change the terms on you with (illegal but unfightable) government backing).
$53.3 billion That is 10 days of US government spending. That does not include what the states blow every day